CBI: interest rate cut ineffective
The CBI considers bank rate cuts are becoming less efective
Commenting on the decision by the Bank of England's Monetary Policy Committee (MPC) to reduce interest rates by 0.5% to 0.5% today , Ian McCafferty, CBI Chief Economist, said: "With interest rates already at historic lows, the conventional rate cutting tool is becoming less and less effective as a means of stimulating the economy.
"Though this latest cut will help support business and consumer confidence, it is unlikely to have a dramatic impact on the cost or availability of credit.
"A swift move towards quantitative easing as a way of boosting money supply and lending directly is now the MPC's best bet for supporting the economy and getting credit flowing again.
"In the current economic circumstances, the risks of higher inflation from such an action would be low."
